In her eighth consecutive budget, a first in independent India, the Finance Minister has presented a timely document that addresses the short-term challenges faced by the Indian economy while maintaining focus on the long-term goal of making India a developed country by 2047.

After three years of robust growth, FY25 saw some moderation in GDP growth, partly due to election-related disruptions in government spending and challenges in private consumption, investment, and the external sector.

The budget provided a significant boost to consumption through a welcome income tax relief, which is expected to inject around Rs 1 lakh crore into consumers’ hands. This will strengthen private consumption, and is also expected to positively impact investment sentiments.

Four engines

While the tax relief announcement has garnered significant attention, the budget is also commendable for its commitment to the goal of ‘Viksit Bharat’ by identifying four key growth engines, viz, agriculture, MSMEs, investment, and exports.

The budget introduced a slew of measures in the agriculture sector focusing on skilling, investment, technology, agri-infrastructure, and irrigation. These initiatives have the potential to address underemployment and low productivity in the sector, improve the nutritional level of the country, and also position India as a food basket for the world.

MSMEs, the largest source of new employment generation in the country, will benefit from enhanced credit availability, easing their financial burden. This will enable them to make new investments, explore new business opportunities, and strengthen their overall competitiveness.

Building on existing reforms and initiatives, the new National Manufacturing Mission can consolidate gains and act as a force multiplier for boosting ‘Make in India’.

Post-COVID, the budget adopted a capex investment-led growth strategy, resulting in markedly improved infrastructure. The focus on hard infrastructure continues, with

announcements that each infrastructure-related ministry will develop a 3-year pipeline of projects to be implemented in PPP mode. The participation of states in driving infrastructure is a welcome step, as this will help with last mile execution of infra projects.

The budget also emphasizes investment in human capital. Initiatives like 50,000 Atal Tinkering Labs, broadband connectivity to government schools and health centers, National Centres of Excellence for Skilling, and a Centre of Excellence in AI for Education will prepare Indian human capital for tomorrow, improving productivity and creating a large and skilled base of workers and researchers for the age of AI.

The fourth growth engine, exports, will be supported by an Export Promotion Mission driven jointly by the Ministry of Commerce, Ministry of MSME, and Ministry of Finance. This mission, with clear ministerial and sectoral targets, will inspire proactive action from stakeholders.

Reform agenda

The budget not only outlines these four growth engines but also lays out an expansive reform agenda to accelerate them. The high growth witnessed by the country in recent years is a direct result of reforms undertaken over the last decade. A renewed thrust on diverse reforms will be crucial for enabling long-term growth prospects.

Tax reforms will reduce the cost of living and doing business, while regulatory reforms will improve ease of doing business and unlock new growth opportunities.

The adoption of a new debt-management framework, aiming to bring the government-debt-to-GDP ratio down to 50±1 percent by 2030, will strengthen long-term macroeconomic sustainability. This will help reduce the burden of interest payments, allowing the government to invest in more productive avenues. Reduced cost of capital will also boost private sector investment.

Overall, the Finance Minister has succeeded in balancing short-term priorities with a long-term growth vision. This budget not only addresses immediate economic challenges but also lays a strong foundation for India’s future development.

The writer is Director General, Confederation of Indian Industry